Box 13 · code AE
K-1 box 13 code AE: deductions against portfolio income
AE is one of the two portfolio-deduction letters in box 13. It says the partnership passed through expenses connected with portfolio income — and it stops there, because the line on the return depends on which expense it is.
The wording on the form is: Deductions—portfolio income. Read against the year printed in the K-1 header, because the letters are reassigned between years.
Where the letter goes
Schedule A, line 16 (other itemized deductions), or Schedule E, line 19, depending on the expense the statement names.
Portfolio deductions are not one kind of thing. Investment interest goes to Form 4952, a safe deposit box goes to Schedule A, and an expense connected with rental royalty income goes to Schedule E. The letter tells you the category; the statement tells you the line.
What has to be true before any of it can be claimed
- There is portfolio income on the same K-1, or elsewhere on the return, for the expense to be deducted against. An expense with nothing to offset is a carryforward, not a deduction.
- The accompanying statement names the expense. A bare AE with no statement cannot be placed on a return without guessing.
- The partner itemizes. A portfolio expense deducted on Schedule A is worth nothing to a partner taking the standard deduction, and that is a fact about the partner, not about the K-1.
What the statement has to show
The statement should name each portfolio expense and its amount. Every line that belongs to AE has to sum to the figure printed beside AE on the K-1. If the statement is longer than the K-1 figure, part of it was allocated away from this partner; if it is shorter, a line was dropped.
What goes wrong, and the shape of it
- AE read as A + E. Two letters, not two codes. A worksheet that splits a two-letter code into its first letter produces a charitable contribution that does not exist and loses the expense that does.
- L and AE used interchangeably. Both are portfolio deductions, and both exist in the 2025 list. They are separate letters with separate amounts. Collapsing them into one column makes the statement impossible to tie out.
- The amount entered without the statement. AE almost always arrives with an attachment. A row that records the figure and drops the attachment reference passes every total on the sheet and still cannot be explained to a reviewer.
What the reading step does here, and what it does not
K1 FastTax reads the letters and amounts printed in box 13, keeps a letter whose amount is on a statement as STMT rather than zero, and records the page. It does not read the statement, and it does not decide which line the expense belongs on.
The rest of box 13 is in the full box 13 code list , and the printed wording of the box itself is on the box 13 page . This page describes where a code goes; it is not tax advice, and the Partner's Instructions for the year on your K-1 are the authority.
Plain answers
Questions about box 13 code AE
What is K-1 box 13 code AE?
Deductions—portfolio income. The partnership is passing through expenses connected with portfolio income. Which line of the return it reaches depends on what the expense actually is, so code AE always needs the attached statement to be usable.
Is code AE the same as code L?
No. Both are portfolio deductions in the 2025 list, and they are different letters with different amounts. The letter is the stable key that ties the K-1 to the statement, so keeping them apart is what makes the statement checkable.
Can I claim an AE deduction if I have no portfolio income?
An expense with no income to offset against generally becomes a carryforward rather than a current deduction. That determination is made on the partner's own return, using the partner's other income — it is not something the K-1 can settle.
Why does my K-1 show AE with no amount?
Because the amount is on the attached statement and the amount space carries STMT. Zero and STMT are different: zero says nothing was allocated to you, STMT says an amount exists and lives on a page you have not opened yet.
Read box 13 code AE from your own K-1
K1 FastTax keeps the letter, the amount and the page together, keeps a statement reference as STMT rather than zero, and records which rows a person checked.